Real estate investing continues to be a proven path to wealth and riches. This is, after all, the main reason why so many people are attracted to the real estate investing business. However, not everyone who buys an investment property starts to make money and becomes a successful real estate investor. In addition, some property investors start their real estate investing career the right way, but somehow end up finding themselves losing profits!
If you’re wondering why does this happen, it’s because the real estate investing business has many possible pitfalls that kill profits and leads to loss and frustration. We at Mashvisor work to empower both experienced and beginner property investors to make the best investment decisions and reach the highest profits possible. For this reason, we’ve put together a list of real estate investing mistakes that kill profits. Avoid these mistakes and you’ll be on your way to becoming a successful real estate investor!
Real Estate Investing Mistake #1: Not Performing a Real Estate Market Analysis
This is absolutely the #1 investing mistake every property investor must avoid if he/she wants to make profits and have a successful real estate investing career. The reason for this is simple: not conducting a real estate market analysis (also called a comparative market analysis) causes the rest of the below mentioned mistakes and hazards which kill profits.
Conducting a real estate market analysis provides the property investor with an evaluation of an income property, its location, and the larger economy to explore the profitability of real estate investing. A comparative market analysis will also compare your rental property to others in your neighborhood or surrounding area to determine whether or not your rental property will make a high profit before even making the purchase.
Thus, not conducting a real estate market analysis is a major investing mistake that kills profits because you might be buying an income property that is not even profitable in the first place without being aware of this. A real estate market analysis will keep you updated regarding what makes for profitable real estate investing.
Real Estate Investing Mistake #2: Not Using a Calculator
The investment property calculator is a real estate investing tool that every property investor needs! An investment property calculator is an online tool in which the property investors input some basic information about an income property (such as the purchase price, the financing method, the cash investment, etc.) This tool, in turn, provides them with all the crucial numbers needed to decide whether this rental property is profitable.
One mistake that kills profits is buying an income property thinking it’s the best one out there, only to discover how wrong you were after making the purchase. Using an investment property calculator ensures you don’t fall into this hazard.
Looking for the best investment property calculator in town? You’ve come to the right place! Mashvisor’s rental property calculator provides the property investor with important cash flow, cash on cash return, and cap rate results based on accurate calculations of the inputs provided by the real estate investor. Not only that, but this real estate investing tool also provides the property investor with data analysis both on the neighborhood level and rental property level to search for and analyze thousands of investment properties across the U.S.
To get immediate access to the best investment property calculator there is, sign up for Mashvisor now!
Real Estate Investing Mistake #3: Investing in a Bad Location
Every smart real estate investor knows that location plays a major role when it comes to real estate investing. Investing in a bad location can significantly kill profits because location determines two important things: supply and demand, and real estate appreciation.
Buying a rental property in a location where supply is high while and demand is low means the real estate investor won’t find tenants to rent an income property, and thus, won’t make any profit. Moreover, investment properties in a location with low appreciation rates mean their values don’t increase, which further means property investors won’t make a profit when they decide to sell them.
A real estate market analysis helps the property investor recognize good locations for real estate investing. Moreover, Mashvisor will also help you in this regard! To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
Real Estate Investing Mistake #4: Buying/Selling at the Wrong Time
When a real estate investor wants to buy or sell a rental property, the main goal is to make the highest profit possible. In real estate investing, the chances of this happening depends on the timing of the purchase or sale. What we mean by this is whether the real estate market is a buyer’s market or a seller’s market at the time.
In real estate investing, a seller’s market is when there is more demand for real estate investment properties than the available supply. In other words, it’s when the number of property investors looking to buy investment properties outpaces the number of available investment properties for sale. On the other hand, a buyer’s market is when there are more investment properties for sale than there are property investors looking to buy.
Selling in a buyer’s market means property investors will have to lower their prices in order to find a buyer, and correspondingly, buying in a seller’s market means you’ll have to offer a higher price in order to get ahead of the many competitors interested in buying the same income property. Either way, this will kill profits in real estate investing. Thus, before making the decision of buying or selling an income property, the property investor has to take timing into consideration!
Real Estate Investing Mistake #5: Miscalculating the Numbers
The final real estate investing mistake that kills profits is miscalculating. As a result, property investors might end up spending too much or too little on their investments. Either way, this will lead to losing money instead of making money from real estate investing.
Sometimes, when real estate investors find an income property that meets their needs, they tend to get anxious and overbid on the rental property, taking on too much debt. This creates higher mortgage payments, negative cash flow, and low return on investment. Ultimately, these leave the property investor with no gain in profit.
In addition, although maintaining investment properties is a must, it doesn’t mean the property investors have to pay too much for repairs or call a professional repairs company for the slightest damage. Cutting down on maintenance will not solve this either! An unmaintained investment property is less likely to attract tenants, and a vacant rental property is definitely a profits’ killer!
This is another investing mistake that can be easily avoided with the help of a real estate market analysis and Mashvisor’s investment property calculator! This real estate investing tool will show you the expected rental income from your rental property, which helps you set a financial budget for repairs and maintenance.
Real Estate Investing Mistakes – The Bottom Line
How do you make the most of real estate investing? Avoid these costly mistakes! Whether you’re an experienced property investor looking for ways to maximize your profits, or a beginner real estate investor looking to ensure you make a profit from buying an income property for the first time, Mashvisor is here for you!
Sign up with Mashvisor to get instant access to the best real estate investing tools, including the investment property calculator, and make smart real estate investment decisions! Click here to learn more about our product.
Schedule a demo with us today to find out how Mashvisor can help you with your real estate investing game.